Tim Rafton (pictured above) leads Insurance Australia Group’s (IAG‘s) claims area across the firm’s intermediated divisions. However, his first experience of IAG’s claims process was as a customer following a terrible car accident 25 years ago. Rafton, executive general manager of intermediated claims for Intermediated Insurance Australia (IIA), shared that story with Insurance Business in a recent article.
Soon after his car accident, Rafton landed a job with the NRMA. He’s stayed with IAG in claims ever since.
His experience on both sides of the claims process gives him an exceptional view of how to overcome its challenges.
Rafton’s payout after his car accident only took about a week.
IB suggested that this speedy process contrasts with an often negative public perception of the claims experience as likely to take many months and possibly end with a ‘no’.
“Absolutely, and I think the honest answer is that sometimes that is the experience,” he said. “I think my take, having spent 25 years doing it now, is that a lot of the processes and the business rules we do to ourselves, no-one else puts them in for us.”
Rafton said a firm’s employees can become lethargic and set in their ways.
One reason for that, he suggested, is recent years of serious challenges for the industry from COVID-19 and supply chain disruption, to multiple natural catastrophes including fires and floods.
“I think through all that volume of claims, the disruptions, and also through adopting and adapting to necessary changes from regulators, we also stepped back and had a look at the way we did things,” said Rafton. “We’d got away from what we know works, which is stripping out complexity, driving simplicity for our people and empowering them to make decisions.”
He said there’s now a renewed focus on investing in digital capability including automation, data analytics and artificial intelligence.
“What we have now is an opportunity to look back and identify areas we can improve through the technology we’ve invested in,” said Rafton.
One of those areas is claims segmentation.
“We’ve really spent the last few years investing in technology that helps make things simpler for people, but also really looking at the types of claims we get and segmenting them,” he said.
He said the “aim of the game” is to match IAG’s capability to the complexity of the claim.
“If it’s a really simple one, then it should be digital, it should be seamless, it shouldn’t need too many questions, you shouldn’t need a huge burden of proof,” said Rafton. “You really should be able to get an answer very, very quickly.”
However, complex claims may involve inputs from multiple people and could include a house visit.
“The approach here is about reinvesting the time saved on simpler claims back into being more helpful on the ones that are more complicated,” said Rafton. “I think it’s all about how smart you are up front getting the key bits of information so that you can then fast track it through to a decision and an outcome.”
He said this segmenting of claims applies across IAG’s range of insurance offerings.
“Across the board the principles are the same but it’s all relative,” said Rafton. “In the spectrum of a motor vehicle claim, the complexity is far narrower than in a liability portfolio or professional indemnity portfolio.”
He said, typically, the high-volume claim areas, like motor, tend to produce simpler, lower value claims that are quicker to resolve.
IB asked the claims expert if he sees this ability to distinguish between simple and complex claims as one of the big changes during his IAG tenure?
“Yes, it is,” said Rafton. He said that, particularly during his early career, he made a point of challenging the status quo and pushing this improvement process along in a spirit of curiosity and a desire to do things better.
The benefit commercially, he said, is “huge efficiency savings” which can be reinvested in more complex areas including liability and professional indemnity claims.
“Like an injured worker who can’t return to work because they need medical treatment,” said Rafton. “That’s really where people skills, rather than technology skills, really make a difference from an experience and outcome perspective.”
From the customer’s perspective – both direct customers and brokers – this approach, he said, is far better.
“80% of claims are simple at the end of the day,” said Rafton. “For that 80%, our focus right now is build and utilize technology and work with our broking partners as a key part of what we’re doing at the moment.”
He said IAG calls this process ‘rapid claims’.
“Through our broker network in particular, we’re saying to them, ‘Look, here’s the five things we need and if you can provide these things through this digital portal when you lodge the claim we will settle your claim within five days’.”
Greater trust in brokers, he suggested, is also part of it.
“No more questions asked, we’re going to trust you and your experience,” said Rafton.
IB asked Rafton how much of his approach to claims could be a direct result of his insurance experience following the very serious car accident?
“My experience has impacted, there’s no doubt,” he said. “One thing I’ve realized after 25 years is at the end of the day, the people in the business, the claims team, makes up by far the largest portion of an insurance company and touches the most customer interactions of any other process that probably exists.”
However, this process, he said, is probably the only time many customers contact the business and test the value of the product.
“As that saying goes, you only get one chance to make a first impression,” said Rafton. “What I’ve learned over the years is that the financial outcomes come from how smart you are in terms of those people interactions and the processes that you adopt and the simplicity that you drive through the value chain.”
He insisted that financial outcomes are not driving what IAG does in the claims area.
“That may have been the way it worked many decades ago - now it’s very much focused on being a people business, making it simple for people and then deriving the value off the back of that,” said Rafton.
He said the technology also helps IAG staff do their job and is not about doing more with less.
“The simplification work and the technology, as boring as it might sound, is really what I’m focused on and, as an insurer, one thing I’ve definitely learned is boring is good,” said Rafton. “If something is boring it is probably less complicated and so we can just focus on the thing we need to do, which is pay claims, and pay them as quickly as we can.”
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